US to withhold Halliburton bills

The Pentagon is to withhold 15% of the payments it owes controversial firm Halliburton for the company's supply of meals to US troops in Iraq.

A Pentagon spokeswoman said the 15% - some $300m (£165m) - will not be paid until auditors have established the actual final cost of the food.

It comes as US criminal investigations continue into whether Halliburton has overcharged the Pentagon for the meals.

US Vice President Dick Cheney was the previous boss of Halliburton.

The Pentagon and Texas-based Halliburton - the largest private contractor for US forces in Iraq - have been in dispute over the meals for some time.

The US military has long claimed that Halliburton has been overcharging, and at the start of February the firm agreed to pay back $27.4m to the Pentagon, but insisting at the same time that the decision involved no admission of wrongdoing on its part.

"This shows that the system is working," said the Pentagon's Dov Zakheim.

The meals dispute, which involves Halliburton subsidiary Kellogg Brown and Root (KBR), is said to be over the company issuing bills based on estimates and the Pentagon wishing to be charged for exactly how many meals are actually eaten.

"This is a complicated issue which we are currently working through with our customer," said KBR in a statement.

The controversy is another embarrassment for President George W Bush's government and particularly Dick Cheney.

It follows after Halliburton was awarded an array of lucrative contracts in Iraq, without them being put out to competitive tender, amid accusations of favouritism.

Illegal payments

The company is said to have Iraqi deals worth up to a potential $18bn, including the restoration of Iraq's oil industry.

Halliburton also sacked two employees in Iraq at the start of the year for taking bribes worth up to $6m from a Kuwaiti firm involved in the supply of fuel to US forces.

As the Pentagon revealed it was holding back 15% of Halliburton's meal payments, Mr Cheney was due to give a high profile pre-election speech in California.